One-off government aid measures have helped protect the purchasing power of a large number of households in Quebec against soaring inflation, according to a study.
The real purchasing power of a couple with two young children and a median income will ultimately have fallen this year by only 0.6% compared to what it was in 2019, once the measures deployed by governments to offset the effect of inflation, calculated the authors of a study released on Wednesday by the Chair in Taxation and Public Finance at the University of Sherbrooke.
Single people (+4.3%), childless couples (+0.5%) and single-parent families (+1.7%) fared even better, with a slight increase in their real income.
Soaring inflation has been a hot topic this year. Around the Bank of Canada’s 2% target for years, the annual increase in the consumer price index has climbed to an average of 6.8% in 2022, with higher price increases another 9.2% in food and 11.5% in transport.
For the record, in 2022 the Government of Quebec notably paid an “exceptional benefit for the cost of living” ranging from $275 to $400 to beneficiaries of the solidarity credit, then another one-time amount of $500 in the spring for all taxpayers earning less than $100,000 per year, plus another sum at the end of the year ranging from $400 to $600.
Based primarily on estimates and projections pending the publication of official statistics, the analysis of the Chair in Taxation shows more generally “that the one-time amounts offered between 2020 and 2022, whether for COVID-19 or to compensate for the rise in the cost of living, made it possible to stabilize the variation of the purchasing power index during these turbulent years”, observe its authors.
“The projection for the year 2023 reveals that the indexation of tax regimes [prendra] the relay of specific measures. In fact, established on the basis of past inflation, the indexation of tax tables and social transfers should amount to 6.3% in the federal government next year, compared to an inflation expected in Canada of 3 .5%, and be 6.4% for the Government of Quebec against a projected inflation of 3.7%. »